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Friday  December 4, 2009
 

Today's Zinger:

"The Onus For Job Creation Is On The Private Sector, The Onus To Spend More Than You Make Is On Government”

The Morning Briefing:

Click on the link below to appreciate how fast and the impact of rising unemployment over the past 30 months.  The map will open in a separate window.



President Obama is holding a jobs fair, not to fill jobs but to identify ways to stimulate job growth in the United States.  The United States is mired in unemployment.  Despite a .2 points decline in the overall unemployment rate (from 10.2% to 10%), unemployment and low incomes remains the greatest threat to the United States.  While other nations around the globe are coming out of the global recession, the United States continues to lag.  The administration is focused on cap and trade (the environment) and health care while Americans are saying,” show me the jobs!”

The administration has tried to stimulate the economy back to life with government spending, but joblessness continues to haunt our country.  Zinger looks at the implications of government spending on economic recovery, how TARP funds have become a new source of government spending, the legislative agenda and what must be done to reenergize our national economy.


Who Said It?

“Good tactics can save even the worst strategy. Bad tactics will destroy even the best strategy.”



The Morning Briefing:

Late in 2008, President Bush and Congress authorized $700 Billion for the Troubled Asset Relief Program (TARP).  Recognizing that the United States faced a liquidity crisis, the government knew they had to act and act quickly or our economy would shut down.  Many felt that they acted too quickly and essentially bailed out Wall Street and left Main Street in a recession that has gripped the United States for the past two years.

Bailouts through TARP, while messy, where critical to bringing us back from the brink of a far worse economic calamity.  Many people talk about the Stimulus bill as the vehicle for staving off the economic collapse of the US economy, and it has helped ease the situation, but it was TARP that prevented a collapse of our financial institutions.  The government interjecting funds in financial institutions kept these companies from going under.  It also kept funds flowing in our economy to help stabilize the liquidity crisis.

But as the government doled out cash for crisis funds to the financial institutions, strings were attached.  The government has dictated terms.  Not only on the use of the cash, but also on compensation of employees of these companies.  Many United States citizens were outraged at the large compensation packages that some of the Wall Street “thugs” were garnering, especially at a time when the average American was hurting.  The administration added fuel to this fire.  Much as FDR had done in the 30’s, the Obama administration has targeted the greedy and balanced the bailouts against the opportunity to end the “abusive compensation system of Wall Street.”  A number of Legislators believed that forcing financial institutions to take money, even though they didn’t request it, provided the leverage to influence the compensation and policies of these companies, so that is exactly what happened.  Some companies were forced to accept TARP funds.

Now, some of these institutions are working hard to repay the government loans as quickly as possible.  Bank of America just announced that they plan to repay their TARP loan in the near future.  For companies like Bank of America, repaying the TARP loans gets the government out of corporate decision making process that they believe is critical to hiring a new CEO and retaining top talent.  In an industry where average senior compensation is $700,000, it is difficult to retain talent and attract the best and brightest when the government restricts your compensation to $200,000, but it sure made good political rhetoric when they did it.

So now, billions of dollars of TARP loans are beginning to be repaid.  Again, these were temporary loans that should be retired.  With billions of dollars flowing back to Washington, and a $12 trillion dollar deficit that is crippling the government ‘s ability to provide continued economic stimulus during prolonged high unemployment, what is Congress and the administration thinking of doing with the funds.  No, not retire the loans and debt, but use the money for additional programs.  Programs such as “Cash for caulkers”, a new program to push money in the economy targeted at energy efficiency projects.  To Congress, this is found cash.  They do not have to go back to the American people and say we are authorizing new spending limits.  Rather they are redirecting already approved funds.  But, these are not funds authorized for general spending, they are loans and Congress is misapplying these funds.

This administration just does not understand that creating jobs is about establishing an environment that allows business to prosper.   Throwing money in the economy will provide some temporary relief, but it will not alter the economic landscape.  The government has created excessive uncertainty through a legislative agenda that puts too much in play.  Uncertainty on health care, taxes, liquidity, compensation, cap and trade and national debt has resulted in one of the greatest economic freezes our country has seen.  The administration’s answer is to spend more on short term government spending and continued unemployment payments and health insurance for the unemployed.   While there are noble endeavors, they will not solve our most pressing problems.

The failed policies that prolonged the great recession in the 30’s have been adopted by the administration as the vehicle to fuel our economy and reestablish growth.  The administration must focus on policy and stimulus that fosters certainty and competition for American business, that is what will return our country to prosperity.

The Conclusion?

At a time when we desperately need jobs, the administration and the Democratic Congress are focused on their agenda, not America’s current needs.  Health Care and Cap and Trade are important issues for our country, but jobs will enable us to pay for that agenda and right now the administration feels that if they miss this opportunity to enact legislation on health care and the environment, it  may take years before the American public will have an appetite to deal with these issues again.  The truth is the majority of Americans do not have an appetite to deal with these issues now, and Congress nor the administration, has demonstrated an understanding of how to solve the most pressing problem our country faces, JOBS!  A two year recovery from a recession is almost unprecedented.  We now hear that it make take years more before we return to full employment.  The administration's actions will make this the slowest recovery since The Depression.


Who Said It?

“Good tactics can save even the worst strategy. Bad tactics will destroy even the best strategy.”


                                                                                                          General George Patton

Today's ZingerToon:

       

         

 

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